Gold Ends Lower On Strong Dollar; Sheds About 5.7% For Month

Washington (Sept 30) Gold futures ended lower on Tuesday, as the dollar strengthened against a select band of major currencies after some mixed economic data out of the U.S., amid renewed speculation the U.S. Federal Reserve will start hiking rates soon.

Gold shed about 5.7 percent in September.

Continued worries over an economic slowdown in China also weighed on bullion prices. The greenback rose to a fresh 2-year high against the euro after eurozone consumer inflation slowed marginally in September, coming in at 0.3 percent.

In economic news from the U.S., consumer confidence unexpectedly fell from 7-year highs in September amid concerns over the outlook for employment, the Conference Board reported Tuesday. U.S. home prices rose at an anemic pace in July, the S&P/Case-Shiller's 20-city composite index showed Tuesday.

Meanwhile, the Chicago-area manufacturing activity continued to expand in September, albeit at a slower pace than the previous month, a report from the Institute for Supply Management - Chicago showed Tuesday.

With inflation not picking up despite recent stimulus, it is now being speculated that the European Central Bank will announce further measures later this week.

Gold for December delivery, the most actively traded contract, dropped $7.20 or 0.6 percent to settle at $1,211.50 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for December delivery scaled an intraday high of $1,218.20 and dropped to a nine-month low of $1,204.00 an ounce.

On Monday, gold futures ended higher after the dollar weakened on some mixed economic data from the U.S. including a report that showed a bigger than expected decline in pending home sales.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 772.25 tons from its previous close of 773.45 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.91 on Tuesday, up from its previous close of 85.62 late Monday in North American trade. The dollar scaled a high of 86.22 intraday and a low of 85.49.

The euro trended lower against the dollar at $1.2631 on Tuesday, as compared to its previous close of $1.2686 late Monday in North American trade. The euro scaled a high of $1.2702 intraday and a low of $1.2572.

In economic news from the U.S., the Conference Board's Consumer Confidence Index declined to 86.0 in September, down from an upwardly revised reading of 93.4 in August, after having risen for four consecutive months. Economists expected the index to edge up to 92.5 in September, against the initial August reading of 92.4.

A report from the Institute for Supply Management - Chicago on Tuesday showed the Chicago PMI to have decreased 3.8 points to 60.5 in September, falling slightly short of expectations for a reading of 61. A reading above 50 indicates expansion.

U.S. home prices rose at an anemic pace in July, an S&P/Case-Shiller's 20-city composite index showed Tuesday. Home prices were up only 0.6 percent in July from the previous month, slower than the 1 percent rise in June. Analysts expected the index to rise by 1.1 percent on a non-seasonally adjusted basis in July.

From Europe, the U.K. economy grew more than estimated in the second quarter, the Office for National Statistics said Tuesday. Gross domestic product grew 0.9 percent sequentially, up from the prior estimate of 0.8 percent. The annual growth was confirmed at 3.2 percent. GDP was 2.7 percent higher than the pre-economic downturn peak of 2008 instead of 0.2 percent.

U.K. current account deficit increased to GBP 23.1 billion in the second quarter from a revised shortfall of GBP 20.5 billion in the first quarter. The second quarter deficit equated 5.2 percent of GDP.

Meanwhile, unemployment rate in the eurozone remained stable as expected in August, a report from Eurostat showed Tuesday. The jobless rate came in at 11.5 percent in August, the same rate as in July. This was in line with economists' expectations. In the corresponding month of the previous year, the unemployment rate was at 12 percent.

Investors also look ahead to a slew of U.S. economic data this week, including the Labor Department's monthly jobs report, due Friday.